The Department of Education’s Office of Inspector General has joined the call for a crackdown on the use of debit cards that give college students access to their financial aid funds. The office said the department should implement new rules on agreements between colleges and the companies that provide on-campus debit cards.
"Without additional regulation and proper oversight by the Department and schools to ensure that integrity and transparency exists in relationships between schools and [debit card providers], practices associated with the delivery of Title IV funds might not always serve the best interests of students," the report concludes.
The report recommends that colleges be required to monitor whether debit card issuers follow federal rules and have a process to resolve student complaints. It also says the Education Department should require card providers to give students “objective and neutral” information about their products and to stop charging transaction or administrative fees to access federal aid funds. The department may develop regulations to address conflicts of interest or the financial incentives between colleges and card providers.
The Government Accountability Office has also suggested tighter regulation of campus debit cards, and the Consumer Financial Protection Bureau has criticized the lack of transparency in contracts between card providers and colleges. Two lawmakers -- Rep. George Miller (D-Calif.) and Sen. Richard Durbin (D-Ill.) -- requested the new report. They also have been pushing for a crackdown on campus debit cards.